South African Hotel and Gaming company, Sun Int’l pulls out of Nigeria due to recession

Follow 9News Nigeria On Social Media

Social sharing

Sun International joins South African exodus from Nigeria

* South African hotel, gaming group ends Nigerian ambitions

* Weak economy, shareholder dispute weighed on business

* No longer eying Africa expansion, focus on Latin America (Adds CEO, analyst comment, details on Africa portfolio)

By Nqobile Dludla

JOHANNESBURG, Aug 22 (Reuters) – Hotel and gaming group Sun International has become the latest South African business to pull out of Nigeria because of weak economic growth and clashes with regulators and shareholders in the west African country.

In January, Nigeria’s Economic and Financial Crimes Commission (EFCC) launched a probe into Sun International’s initial investment in the Tourist Company of Nigeria (TCN) , which owns and operates the 5-star Federal Palace Hotel in Lagos.

Sun International, which also reported on Monday a 20 percent fall in diluted adjusted headline earnings per share (AHEPS) to 628 cents for the year to June, said The Federal Palace had been hit by slow economic growth, low oil prices, the threat from militant group Boko Haram and a weakening naira.

“The board has decided to exit Nigeria and steps will be taken to achieve this in a manner that does not erode further value,” the company said in a statement.

“Continued setbacks in Nigeria as well as the ongoing shareholder dispute have frustrated all attempts to develop and improve the property,” it added.

READ ALSO  Official Document Finally Exposes 54 Persons Behind IPOB Activities In Nigeria And 22 Other Countries (See Full List)

Sun International bought a 49 percent stake of the Nigerian Stock Exchange-listed TCN in 2006, becoming the largest single shareholder. In recent years, Sun has been drawn into a dispute within its fellow shareholder, the Ibru family.

The company’s decision to exit Nigeria follows food and clothing retailer Woolworths and Tiger Brands, which sold its loss-making Nigerian arm to Dangote Industries.

Nigeria, Africa’s largest economy, is suffering its worst financial crisis in decades as a slump in oil revenues hammers public finances and the naira. The central bank governor has said recession is likely.

Analysts said Sun International’s dispute with fellow investors was at least as important in its decision to leave.

“They are in a way stuck in a problematic arrangement on the property and it’s been very difficult for them to create value there. It certainly makes sense for them to reduce exposure to Nigeria,” said Avior Capital Markets analyst De Wet Schutte.

“Nigeria is a difficult place to build a business.”

CEO Graeme Stephens said the exit could take a year or two, and the company was no longer committed to expanding in Africa.

“We’ve been strategically exiting Africa for a couple of years and what was left was Nigeria. We’re not looking anywhere else in Africa,” Stephens told Reuters, adding the company would focus on growing its Latin America business.

READ ALSO  Check Out Ten States In Nigeria That Borrowed From The CBN To Pay Salaries

In June, Sun said it was disposing its remaining minority interests in Zambia, Botswana, Namibia, Lesotho and Swaziland to Minor International Public Company.

Shares in Sun International were down 0.47 percent by 1139 GMT.

Reporting its results, the company said poor economic conditions in South Africa resulted in revenue growth at casinos of only 0.8 percent to 7 billion rand ($515 million).

“In South Africa, the economic environment remains a serious concern. We do not anticipate any meaningful growth in gaming revenue until there is a recovery in the economy and renewed consumer confidence,” Stephens said.

The South African Reserve Bank expects the economy to flatline this year, due to a drought and falling commodity prices.

($1 = 13.5980 rand) (Editing by Keith Weir and Mark Potter)

 

Leave your comment on this post

THE ROTTEN FISH: CAN OF WORMS OPENED OF APC & TINUBU'S GOVERNMENT OVER NIGERIA'S ECONOMIC DOWNTURN

WATCH THE CRITICAL ANALYSIS AND KNOW THE RESPONSIBLE PARTIES TO BLAME FOR NIGERIA'S ECONOMIC CHALLENGES, WHILE CITIZENS ENDURE SEVERE HARDSHIPS.

Watch this episode of ISSUES IN THE NEWS on 9News Nigeria featuring Peter Obi's Special Adviser, Dr Katch Ononuju, 9News Nigeria Publisher, Obinna Ejianya and Tinubu Support Group Leader, McHezekiah Eherechi

READ ALSO  BREAKING!!! Detained Binance Executive Escapes From Custody, Flee Nigeria(Photo)

The economic crisis and hardship in Nigeria are parts of the discussion.


Watch, leave your comments, and share to create more awareness on this issue.


#9NewsNigeria #Nigeria #issuesInTheNews #politics #tinubu THE ROTTEN FISH: CAN OF WORMS OPENED ...
DON'T FORGET TO SUBSCRIBE AND LEAVE YOUR COMMENTS FOR SUBSEQUENT UPDATES
#9newsnigeria #economia #economy #nigeria #government @9newsng
www.9newsng.com

Leave your comment

Click on the link below or Scan the QR Code to join the 9News Nigeria WhatsApp Channel

9News Nigeria Investigative Reports WhatsApp Channel
9News Nigeria Investigative Reports WhatsApp Channel
About 9News Nigeria 13308 Articles
9News Nigeria is Nigeria's favourite news source. For Authentic, Unbiased News on Politics, Business, Sports, Technology, Entertainment and Lifestyles, Health, Nollywood, Crime and Investigations, Family and Relationships, Inspirations .. and much more. For Latest News from Africa and around the world, 9News Nigeria is your best source. WhatsApp +2348115805632 Email: info@9newsng.com Facebook: www.facebook.com/9NewsNG | Twitter/Instagram: @9newsng

Be the first to comment

Leave your comment